KUALA LUMPUR (Aug 26): NationGate Holdings Bhd (KL:NATGATE) climbed to a 17-month high on Wednesday after its second-quarter results met consensus estimates and exceeded at least one analyst's forecast, signalling further upside potential.
The stock rose as high as 35 sen, or 23.5%, to RM1.84 — the highest since Feb 28, 2025 — before closing at RM1.70, still up 21 sen or 14.1%, on Wednesday.
It was the most active counter with 172.09 million shares changing hands.
Kenanga Research said NationGate’s adjusted net profit of RM28.3 million for the second quarter ended June 30, 2026 (2QFY2026) came above its expectations and within consensus, with the first half accounting for 69% of its full-year forecast and 48% of the consensus estimate.
At the current share price, the house believes the earnings potential from NationGate’s new photonics customers has yet to be meaningfully priced in, presenting an attractive risk-reward profile.
"We estimate downside per share of 36 sen should the new programmes fail to materialise, compared with upside of 74 sen upon successful execution, implying a favourable reward-to-risk ratio of two times," Kenanga said in a note on Wednesday.
Post-results, the house kept its earnings forecasts and street-high target price of RM2.14, while reiterating its 'outperform' call on the stock.
In a separate note, UOB Kay Hian upgraded the stock to a 'buy' with a higher target price of RM1.88, following earnings recalibration based on a rollover of 24 times 2027 price-earnings ratio.
The upgrade came despite NationGate's 2QFY2026 earnings coming in below its expectations, due to a slower-than-expected recovery in both revenue and margins against its earlier optimistic assumptions for 2026.
"We see an earnings inflection from 4QFY2026, driven by new optical module programmes, booming AI data centre demand and improving yields.
"We expect the growth trajectory to accelerate further into 2027, as higher ramp-up, better yields and stronger operating leverage drive an anticipated S-curve earnings recovery," UOB Kay Hian said.